complete Packaging & Shipping Supplies, Inc. v First Data Servs., LLC

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complete Packaging & Shipping Supplies, Inc. v First Data Servs., LLC 2011 NY Slip Op 33652(U) October 5, 2011 Supreme Court, Nassau County Docket Number: 7720-11 Judge: Timothy S. Driscoll Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] 5'c SUPREME COURT- STATE OF NEW YORK SHORT FORM ORDER Present: HON. TIMOTHY S. DRISCOLL Justice Supreme Court ------------------------------------------------------------------- x TRIAL/IS PART: COMPLETE PACKAGING AND SHIPPING SUPPLIES, INC., NASSAU COUNTY Plaintiff, Index No: 7720- Motion Seq. No. -against- Submission Date: 8/19/11 FIRST DATA SERVICES, LLC as successor in interest to CHASE MERCHANT SERVICES, LLC, Defendants. --------------------------------------------------------------------x The following papers having been read on this motion: Notice of Motion, Affirmation in Support, Affidavit in Support and Exhibits... Affrmation in Opposition, Affidavit in Opposition and Exhibits..................... Affrmation in Further Support, Affidavit in Further Support and Exhibits.... This matter is before the Cour for decision on the motion filed by Defendant First Data Services , LLC , as successor in interest to Chase Merchant Services , LLC (" FDS" or Defendant") on June 30, 2011 and submitted on August 19 , 2011. For the reasons set forth below, the Cour grants the motion and dismisses the Amended Complaint. BACKGROUND A. Relief Sought Defendant moves for an Order, pursuant to CPLR 3211(a)(1), (5) and (7), dismissing the Amended Verified Complaint (" Amended Complaint" Plaintiff Complete Packaging and Shipping Supplies , Inc. (" Complete " or "Plaintiff' opposes Defendant' s motion. ! As discussed infra after the instat which the Cour addresses in this decision. motion was fied , Plaintiff fied an Amended Verified Complaint [* 2] B. The Parties ' History The initial Complaint (Ex. A to Lieberman Aff. in Supp. ), fied May 25 2011 , alleges as follows: First Data s business includes the processing of merchant credit card transactions. On or about August 18 , 2000 , Chase Merchant Services , LLC (" CMS" ), a merchant credit card processing company, entered into an agreement ("Agreement" ) with Complete pursuant to which CMS would provide account processing services for credit cards for Complete. In November of 2008 , First Data became the successor in interest to CMS and assumed its rights and interests under the Agreement. As successor in interest to CMS and pursuant to the Agreement, First Data would collect and receive amounts charged by customers of Complete , and remit payment to Complete. The Complaint contains three (3) causes of action. In the first cause of action , Complete alleges that on or about May 24 2004 through June 2 , 2004 , charges totaling $245 761. 98 were processed through CMS/First Data on behalf of Complete. CMS/First Data collected that amount on or about July 1 2004 but failed to remit payment of that amount to Complete until on or about July 15 2010. Complete alleges that CMS/First Data' s failure to remit payment to Complete for over six (6) years constitutes a breach of the Agreement, entitling Complete to interest and damages believed to be in excess of $221 000. 00. In the second cause of action , Complete again alleges that CMS/First Data' s delay in remitting payment constituted a breach of the Agreement , entitling Complete to damages believed to be in excess of$221 000. 00. In the third cause of action , Complete alleges that , as a result ofCMSlFirst Data s delay in remitting payment , CMS/First Data has been unjustly enriched , entitling Complete to damages believed to be in excess of$221 Following the fiing of the instat motion , OOO. OO. Plaintiff filed an Amended Verified Complaint Amended Complaint" ) (Ex. A to Pollack Aff. in Opp. ). With the agreement of counsel for the paries , the arguments raised by Defendant in its moving papers wil be applied to the Amended Complaint , and Defendant has addressed the new cause of action for conversion in its reply papers. The Amended Complaint contains the same first though third causes of action as the initial Complaint , and also contains a fourh cause of action alleging conversion by CMS/First Data in exercising rights of ownership over the $245 761.98 , which rightfully belonged to Complete , from 2004 to 2010. In his Affidavit in Support , Vashti Ramdeen (" Ramdeen ), a Senior Legal Analyst employed by First Data , affrms that he is familiar with Complete by virtue of his job [* 3] responsibilities which include the review and investigation of merchant disputes. Ramdeen provides a copy of the Agreement (Ex. B to Ramdeen Aff. in Supp. ), and affirms that, pursuant to the Agreement , Complete agreed to be bound by the provisions set forth in the CMS Program Guide (id). Ramdeen explains that a settlement account (" Settlement Account" ) is the ban account designated by the merchant as the account for credits and debits related to the credit card transactions processed by the processor. Monies due the merchant from a transaction are credited to its Settlement Account , and monies due from the merchant are debited from its 18. 8 of the Program Guide which required Complete to Settlement Account. Ramdeen cites notify CMS/First Data in wrting, within 45 days afer any disputed debit or credit, if Complete believed any adjustments should have been made with respect to its Settlement Account. 20. 3 of the Program Guide which relieves CMS/First Data of Ramdeen also makes reference to any liabilty " regardless of whether such damages were foreseeable or whether any par or any entity has been advised of the possibilty of such damages. " And 20.4 of the Program Guide limits CMS/First Data s liabilty to $50 000 , or the amount of fees received by CMS/First Data pursuant to the Contract for services performed in the immediately preceding 12 months whichever is less. 24. 2 of the Program Guide provides that CMS/First Data will hold any Reserve Account for the greater of ten (10) months after termination or for such longer period. of time as is consistent with our liabilty for Card transactions in accordance with Association Rules. Ramdeen affrms that, following the execution of the Agreement , Complete began to process from multiple locations. In May and June of 2004 , Complete s processing volume exceeded the limits in the Agreement. As a result, monies from those credit card transactions were diverted and held pursuant to the Agreement. Complete never requested a retu of these fuds. Complete stopped processing through CMS/First Data in 2007 , and its account was terminated in Febru of2008. At the time of the termination , the money was stil being held in a Reserve Account. Ramdeen explains CMS/First Data' s procedure for unclaimed monies. Prior to the unclaimed monies being escheated to the merchant's home state , CMS/First Data attempts to contact the merchant at its last known address , advise the merchant of the monies and provide the merchant with the opportity Ramdeen Aff. in Supp. to retrieve the monies. By letter dated July 6 , 2010 (Ex. C to Release of Funds Form ), which contains the subject line " RE: NOTICE OF RELEASE OF FUNDS " CMS/First Data notified Complete that it had monies [* 4] which Complete could re- claim by completing and returing the Release of Funds Form. The Form advised Complete that 1) the amount to be retured was $245 761.98; 2) the relevant account had been closed or inactive for an extended perio.d of time; 3) the monies could be reclaimed by signng and retuing the Release of Funds Form; 4) by signing the Release of Funds Form , Complete was certifying that the information provided was correct; and 5) if Complete disagreed with the balance , it was to "provide an explanation of the discrepancy together with all supporting documentation. " Complete signed and retured the Release of Funds Form to CMS/First Data, provided no indication of its disagreement with the balance set forth on the Form , and did not supply any supporting documentation. Moreover , durng the more than six (6) years that the monies were being held in reserve , both before and afer the termination of the Agreement , Complete never requested that the monies be relieved from reserve , or made any other demand for a retu of July 15 the fuds. The monies remained in a reserve account until 2010 , at which time they were released to Complete. In opposition , Jeffey Berkowitz (" Berkowitz"), the President of Complete , concedes that he received and executed the Release of Funds Form , affirming that " (o)f course I wanted my money and simply signed and retured the notification letter" (Berkowitz Aff. in Opp. at ~ 3). Berkowitz affirms , however , that he relied on Defendant's " honesty, integrity and accuracy" in handling Complete s account (id at ~ 4), and , while he was aware of the existence of retention periods , he relied on D fendant to remit payment at the expiration of the retention period. BerkoWitz affirms that he subsequently spoke with counsel and determined that Defendant should have delivered the fuds to Complete on or about July 1 , 2004 , and instead wrongfuly diverted those fuds for its own use for six (6) years. In reply, Ramdeen submits that Complete was "well aware " (Ramdeen Aff. in Furer Supp. at ~ 2) that a Reserve Account was fuded in 2004 "to secure any contingent or actual obligations related to the Complete merchant accounts (id). Ramdeen affrms that Complete 1) received monthly statements of its credit card activity; and 2) was required to retain all sales and credit drafts related to transactions. Thus , a comparison of the statements to the actual transactions and ban account statements would reveal that monies were being diverted to the Reserve Account. Moreover , even if Complete was not actually aware of the Reserve Account it was obligated , pursuant to ~ 18. 8 of the Program Guide , to reconcile its account and notify CMS/First Data of any discrepancies , which it failed to do. Ramdeen also submits that Complete has provided an inaccurate explanation of credit card transactions. First Data does not collect money from a customer or remit money to a [* 5] merchant; rather , it is a faciltator between bans that acquire sales drafs from merchants credit cards (" Issuers ). This Acquirers ) and bans that issue Lieberman Aff. in Furher Supp. at p. (See Preface of the Program Guide. procedure is explained in the 2). In addition monies in a Reserve Account are not loaned to thrd paries , or applied to other accounts, as asserted by Complete in its opposition. C. The Paries ' Positions Defendant submits that , pursuant to the Agreement , Complete agreed that 1) pursuant to ~ 18. 8 of the Program Guide , Complete was required to notify of any adjustments it FDS/CMS believed should be made to its Settlement Account , within 45 days after the affected credit; 2) pursuant to ~ 24. 2 of the Program Guide FDS/CMS was permitted to retan monies held in a reserve account for at least ten (10) months after the Agreement was terminated; 3) pursuant to ~ 20.3 of the Program Guide would not be responsible for any lost profits , lost FDS/CMS revenues , lost business opportunities , exemplar, puntive , special incidental , indirect or consequential damages; and 4) pursuat to Program Guide ~ 20.4 , FDS/CMS' liabilty would be limited to the lesser of$50 000 or the amount of fees that FDS/CMS received for services in the imnediately preceding 12 months. Moreover , as outlined in the Ramdeen Affdavit , 1) the Agreement was terminated in Februar of 2008 , and FDS/CMS had not processed credit card transactions for Complete since 2007; 2) in 2004 , proceeds of credit card transactions submitted for processing by Complete were diverted and held pursuant to the terms of the Agreement , and monies were stil being retained at the time of the termination of the Agreement in 2008; 3) Complete never questioned the FDS/CMS' retention of fuds; and 4) Complete signed and retured the Release of Funds Form , and never disputed the amount set forth therein. In light of the foregoing, Defendant submits that 1) the Complaint is bared by the statute of limitations , in light of Complete s allegation that FDS collected and received the charges totaling $245 761.98 on or about July 1 2004 (Compl. at ~~ 10- 12), which would be the date of accrual of Plaintiff s breach of contract and unjust enrchment causes of action; 2) the Complaint is bared by documenta evidence , specifically the Release of Funds Form and the Agreement; 3) in light of the limitation of liability clause set forth in ~ 20.4 ofthe Program Guide , and the fact that FDS/CMS had not processed any transactions for Complete for more than 12 months before Complete made its claim and therefore had not received any fees for services , FDS/CMS has no liabilty to Complete under the Agreement; 4) the first cause of action for breach of contract is not viable in light of Complete s acknowledgment that it received payment in the sum [* 6] of$245 761. 98; 5) the second cause of action , also for breach of contract , contains no specific allegations and should be dismissed as duplicative of the first cause of action; 6) the doctrne equitable estoppel is inapplicable given Complete s failure to allege how Defendant's actions caused the delay in Plaintiff filing its action; and 7) no cause of action for conversion ever accrued , in light of the fact that a) Complete does not allege that it demanded the monies in the Reserve Account; b) even if the Retur of Funds Form constitutes such a demand , FDS/CMS retued the fuds to Plaintiff; and c) FDS/CMS never disposed of the fuds in the Reserve Account , except to retur them to Plaintiff. Plaintiff opposes Defendant' s motion , submitting that a) Defendant did not have the authority to withold fuds , in light of the language in ~ 16.1 ofthe Program Guide stating " to. Pro.mptly after presentment of Sales Drafts pursuant to. yo.U; transfer o.fthe applicable settlement fuds applicatio.n. yo.ur will only be required to settle Card transactions for Cards specified in the Operating Procedures , we will initiate 2) the limitatio.n o.f liabilty clause is vo.id as against public po.licy; 3) Plaintiff has been damaged by the lo.ss o.fuse o.fthe fuds at issue, and to. is entitled began interest o.n tho.se ru when Defendant to. fuds; 4) the actio.n is no.t time- bared as the statute o.flimitatio.ns no.tified Plaintiff, in July o.f2010 , that it was ho.lding the fuds in the Reserve ACCo.unt; 5) Plaintiffs executio.n o.fthe Retur o.fFunds Fo.rm did no.t co.nstitute an ackno.wledgment that no. o.ther mo.nies were o.wed, Dr a release o.f sho.uld be precluded fro.m asserting the statute claims; and 6) Defendant o.f o.f limitatio.ns as a defense in light the fact that it was Defendant's misco.nduct that resulted in the delay in the filing o.fthis actio.n. RULING OF THE COURT Standards o.f Dismissal A co.mplaint may be dismissed based upo.n do.cumenta evidence pursuant to. . CPLR ~ 3211(a)(I) o.nly if the factual allegatio.ns co.ntaned therein are definitively contradicted Yew Prospect, by the evidence submitted Dr a defense is co.nclusively established thereby. v. Szulman 305 A. Sta-Bright 2d 588 (2d Dept. 2003); Services, Inc. v. LLC Sutton 17 AD. 3d 570 (2d Dept. 2005). to. A mo.tio.n interpo.sed pursuant fo.r failure to. state a cause o.f actio.n , must be denied if the factual allegatio.ns co.ntained in the co.mplaint co.nstitute a cause 268 (1977); CPLR ~ 3211 (a)(7), which seeks to. dismiss a co.mplaint 511 W 232 o.f action cognizable at law. Owners Corp. v. Guggenheimer Jennifer Realty Co. v. Ginzburg, 43 N. Y.2d 98 N. Y.2d 144 (2002). When [* 7] entertaining such an applicatio.n, the Co.ur must liberally co.nstrue the pleading. In so. doing, the CDur must accept the facts alleged as tre which maybe drawn therefro.m. hDwever , the CDur Leon v. and acco.rd to. the Martinez 84 N. plaintiff every favo.rable inference 2d 83 (1994). On such a mo.tio.n will nDt presume as true bare legal co.nc1usiDns Palazzolo flatly co.ntradicted by the evidence. v. Herrick, Feinstein and factual claims which are 298 A. 2d 372 (2d Dept. 2002). Pursuant to. CPLR ~ 3211(a)(5), a par may mDve to. dismiss a cDmplaint on the grDund that it is fo.reclo.sed B. by the applicable statute o.f limitations. Causes of ActiDn To. establish a cause o.f actiDn for breach cDntract, o.ne must demDnstrate: 1) the Df existence o.f a cDntract between the plaintiff and defendant , 2) cDnsideration , 3) perfDrmance by the plaintiff, Furia 4) breach by the defendant, and 5) damages resulting frDm the breach. 116 AD.2d 694 (2d Dept. 1986). 802 (2d Dept. 2010) (co.mplaint suffcient plaintiffs perfo.rmance citing, v. JR. See also JP Morgan Chase under contract , Furia Electric 69 AD.3d where it adequately alleged existence o.f contract defendant' s breach o.f co.ntract and resulting damages), inter alia , Furia , supra. The essential inquiry in any actiDn fDr unjust enrchment is whether it is against equity and go.o.d cDnscience to. permit the defendant to. retain what is So.ught to. be recovered. Such a claim isundo.ubtedly equitable and depends upDn bro.ad cDnsideratio.ns o.f equity and justice. Generally, co.urs will determine whether 1) a benefit has been cDnferred on defendant under mistae o.ffact Dr law; 2) the benefit stil remains with the defendant; and 3) the defendant's co.nduct was to.rtious Dr fraudulent. v. Paramount Film Distributing Corp. 415 421 (1972). Plaintiffmay not maintain an actio.n dispute is go.vemed by an express co.ntract. fDr unjust enrchment where the matter in v. Scavenger, Inc. New York 30 N. Interactive Software Corp. , 289 AD. 2d. A cDnversio.n takes place when defendant , intentio.nally and withDut autho.rity, assumes Dr exercises cDntro.l over persDnal propert perso.n s right o.fpo.ssessiDn. Colavito v. belo.nging to' So.meDne else , interfering with that Organ Donor Network 8 N. Y.3d 43 49- 50 (2006). The two. key elements of cDnversion are 1) plaintiff s pDssessDry right Dr interest in the propert, and 2) defendant' s dDminiDn Dver the pro.pert Dr interference with it , in dero.gatio.n Dfplaintiffs [* 8] at 50. Id rights. Relevant CDntract Principles C. be cDnstred in acco.rdance to. Agreements are with the paries ' intent. When paries set dDwn their agreement in a clear co.mplete dDcument , their writing sho.uld be enfo.rced to. Giancontieri 77 N. Y.2d v. W W W Assoc. qUDting Madison Realty Co. 1 N. Y.3d 470 , 475 (2004), v. 538 Vermont Teddy Bear Co. is terms. v. Evan D. 157 , Df discernble frDm the plain meanng of the language fuher. 162 (1990). Where the paries ' intent is the co.ntract , lo.o.k to. there is no. need Famous Music Corp. 1 N. Y.3d 452 , 458 (2004). EstDppel The elements o.f esto.ppel are , with respect to. the to. acco.rding par esto.pped: 1) cDnduct that amo.unts a false representatio.n Dr co.ncealment o.f material facts , 2) intentiDn that such cDnduct will be acted upo.n by the o.ther par, and 3) knDwledge o.fthe real facts. The to. must sho.w with respect conduct Dfthe par, and himself: 1) lack of kno.wledge o.f the tre 3) a prejudicial change in his pDsitiDn. Div. V. Niagara Mohawk Power Corp. 76 AD. 2d v. Springside Land Company, LLC 68 Id. par asserting esto.ppel facts , 2) reliance upo.n the at 577 , citing 81- 82 (4th Deparent Airco Alloys 1980). See Board of Managers of Springs ide Condominium 1 to. 654 (2d Dept. 2008) (defendant entitled 56 A.D.3d dismissal o.f cause o.f actio.n based on equitable estDppel where bo.th paries knew of true facts). E. LimitatiDn Df Liability PrDvisio.ns It is settled that a contractual pro.visiDn that limits damages will be enfo.rced unless a special relatio.nship exists between the paries , Dr a statute Duane Reade despite the restrctiDns set fo.rth in the co.ntract. inter alia , Peluso AD.3d 108 , 111 (1 st Dept. 2005), citing, Dr public policy impDses liability v. v. 405 Lexington, L.L. , 22 Tauscher Cronacher Professional Engrs. 270 AD. 2d 325 (2d Dept. 2000). F. The ApplicatiDn o.fthese Principles to. the Instant Actio.n CDur dismisses the seco.nd cause breach o.f co.ntract , based o.n the CDur' o.f actio.n in the Amended Complaint , alleging cDnc1usio.n that it is duplicative of the first cause o.f actiDn. The Co.ur dismisses the third cause o.f actio.n in the Amended CDmplaint , based Dn unjust enrichment , based Dn the Co.ur' s determinatio.n that ths light Df the existence o.f the Agreement. cause ofactio.n is nDt viable in [* 9] The Co.ur dismisses the first and fo.urh causes o.f actio.n in the Amended CDmplaint alleging breach o.f cDntract and cDnversiDn , pursuant to CPLR ~ 3211(a)(1), based Dn Df cDnc1usio.n that tho.se causes actio.n are bared the Co.ur' by dDcumenta evidence , specifically the Agreement and Release of Funds Fo.rm , which are clear and co.mplete dDcuments that shDuld be enfo.rced accDrding to. their terms. That dDcumenta evidence establishes that 1) Defendant was authDrized , pursuant to. the Agreement, to. maintain certain o.f Plaintiff s mo.nies in a separate , by executing and retuing the Release DfFunds FDrm acco.unt; 2) Plaintiff and accepting the fuds fo.rwarded to. him by Defendant, ackno.wledged that the fuds remitted to. him were appro.priate; and 3) Defendant has permissibly restrcted its liabilty by inserting relevant language in the Agreement and , pursuant to. that language , Defendant has no. liabilty to. Plaintiff under these circumstances. CDur' determinatio.n that the actio.n is bared In light Dfthe the Co.ur will no.t address the issue Df whether the actio.n is time-bared. The Co.ur nDtes ho.wever , that there appears to. be no. basis fo.r Plaintiffs bared Df , the dDctrine Df by documentar evidence claim that, if the actio.n were time- equitable estDppel wo.uld be applicable and wo.uld fo.reclDse the assertiDn such a defense by Defendant. The Amended CDmplaint is hereby dismissed. All matters no.t decided herein are hereby denied. This co.nstitutes the decisiDn and Drder of the CDur. ENTER DATED: Mineo.la, NY OctDber 5 , 2011 HON. TIMOTHY S. DRISCO ENTERED oel 12 2011 NASSAU COUNTY S OFFtCE COUNTY CLERK'

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